There was a gap in the involvement of banks in the aviation industry in the past few months due to the reigning adverse circumstances in this sector. Due to increase in jet fuel rates globally, upsurge in airport taxes and several other factors, flight booking was experiencing a record low, which led to airlines slumping to heavy losses in the market. As a result, Indian banks preferred staying away from this sector during this period. With carriers returning to profitable ways recently, the banking sector is also taking tender steps towards reforming their association with them. Recently, the Wadia Group aviation foray, Go Air made a loan request of INR 1500 crores to boost its fleet, which has been the point of debate in the industry.
Led by Central Bank of India, an association of six Indian banks are looking into the proposal of Go Air, which is mainly targeting for the increase its fleet. Recently, this leading low-cost carrier (LCC) was successful in getting its name enrolled along with market leaders, Indigo, in the profit-league. There was an increase in Go Air ticket booking during the festive season recently, which has helped this LCC to return to positive gross income. As a primary step, it applied for the loan citing the reason of fleet expansion, which is currently 18 Airbus A320 aircraft.
Aiming Initiation of International Services
According to the reports, this airline has strong inclination towards going international in the near future. However, according to the current civil aviation rules, carriers having less than 20 aircraft or operating for less than five years are not permitted to initiate international services. In the current scenario, if this loan is sanctioned, it would surely help Go Air overcome the minimum aircraft barrier. Also, the bankers have confirmed that if they are satisfied with the proposal of this LCC, they would definitely sanction the loan. As this airline is the only one in the domestic sector, which has not begun international services as of yet, it is looking to achieve the same as soon as possible.